We should not be forced to pay for costly electricity we don’t need

By Michael Webster

Michael Webster is executive director of the Southern California Public Power Authority, a joint powers authority comprised of public power utilities that serve 5 million people, mwebster@scppa.org. He wrote this commentary for CALmatters.

California’s effort to set a global example in tackling the effects of climate change is laudable and ambitious. Among the goals:

• A 40% reduction below 1990 greenhouse gas emission levels by 2030.
• More low-carbon transportation fuels and dramatically increasing the use of electric vehicles.
• A 60% renewable electricity portfolio by 2030 coupled with a 100% carbon-free goal, including zero-carbon resources like large hydropower.

California’s electric utilities, including its publicly-owned utilities, are shouldering a significant role in helping meet these goals.  

Indeed, electricity sector emissions in 2016 were nearly 38% below 1990 levels according to the California Air Resources Board’s inventory. That is significant progress, but much more needs to be done, all while keeping rates as competitive as possible.

Fortunately, there are existing and emerging technologies to help us reach these targets, including solar, wind, geothermal, biomass, landfill gas, hydrogen, small packaged nuclear, batteries, energy efficiency upgrades, electric vehicles, hydropower including “pumped storage,” and changes in customer behavior.

All of these technologies have benefits and can play important roles in our effort to combat climate change.

But one issue before us, and what must be a critical consideration for policymakers, is how much each of these technologies will cost California ratepayers, and at what benefit.

Gov. Gavin Newsom has said we face an affordability crisis, especially when it comes to housing. Rising housing costs disproportionately impact low- and moderate-income Californians.

That’s why electric utilities are seeking the lowest-cost, best-fit resources for their communities while also ensuring a reliable electric grid. Reliable and cost-effective power keeps businesses and jobs in California.

Energy procurement mandates that do not consider need or costs only worsen our affordability crisis.

Pumped hydropower storage is one source of electricity that plays a role in California’s energy mix, and can further help with integrating intermittent renewable energy so long as it makes sense for California’s ratepayers.

Unfortunately, Senate Bill 772 by Sen. Steven Bradford, a Gardena Democrat, would force publicly-owned utilities and their ratepayers to pay for pumped hydropower storage, the vast majority of which would come from a single project, even if the utilities and their ratepayers don’t need it and would receive no benefit from it.  

One can support pumped storage while also agreeing that the approach proposed by SB 772 is fundamentally unfair to California’s ratepayers who already face rising energy costs.  

Pumped hydropower is a capital intensive technology, and most projects carry price tags in the multiple billions of dollars. If procuring this technology makes financial sense for ratepayers, then publicly-owned utilities would surely procure it on the open market as they do other renewable resources. But our ratepayers should not be forced to pay for something they neither need nor want.  

California’s electric utilities are at a crossroads.  

We are watching unprecedented market transformation take shape within the privately-held utility service territories. Every utility in California is closely examining what more must be done to combat a changing climate that has resulted in devastating wildfires across.  

This will take comprehensive steps, including significant investments in hardening the electric grid, and more aggressive vegetation management and forest management programs to prevent catastrophic wildfires.

It will also require significant ratepayer investments. We believe this will be money well spent and will save lives and homes.

Publicly-owned utilities have a demonstrated track record of procuring a diverse portfolio of energy resources while keeping costs low for their ratepayers. But Senate Bill 772 would undermine those efforts by mandating costly technology on the backs of ratepayers.